Governments and their respective central bankers around the world are on a push to get rid of cash in society, or at least make it a lot harder to use. As with almost everything the government does, it is done in the name of keeping us safe.
There are stories around the globe about politicians and central bankers trying to eliminate high-denomination currency bills, such as the one hundred dollar bill in the United States. There are also severe and strict limits on the amount of cash you are permitted to deposit into a bank account.
In the past, this was typically done in the name of the war on drugs. If you use a lot of cash, then the government can assume you are dealing drugs. Now we are told that this limit on cash is to fight terrorism, although it is not quite clear on why a terrorist could not just use a credit card.
Maybe the government really is just looking out for our best interest, as not having cash does prevent your money from being stolen. There was a recent theft in Manhattan where up to $100 million was stolen.
The only problem is that this money wasn’t stolen in the form of cash. It was initially stolen in the form of digits. Even worse, it was stolen from the Federal Reserve Bank of New York.
If you made a movie about stories like this, I’m not sure if anyone would watch because it would be considered too unrealistic.
In this case, the government of Bangladesh had its money stolen from the Federal Reserve Bank of New York. As with many other governments around the world, Bangladesh keeps money with the Fed for safety and security.
It is now being claimed that hackers – if that is what you want to call them – tried to get as much as $1 billion. But the Fed apparently gave the green light to let $100 million go through the clearing system for international payments. It is now thought that this money was funneled through various channels, including casinos located in the Philippines.
Was this just a mistake by the Fed, or was it intentionally funneling money to a secret group? And if it was just a mistake, how could something this big happen?
We live in an increasingly digital world. When you think about it, for the majority of Americans, most of their transactions, or at least their major transactions, are digital. They don’t deal in cash. Most cash transactions are in fact small. If you go to Best Buy to buy a big screen television, you probably aren’t going to pay in cash.
As long as we have a fiat money system controlled by the government and central bank, it is important that we have some choice in the matter. That choice is between cash and digits. They are both important and both serve a function.
Although I am all for people maintaining their privacy, especially from government, there are times that we do not want privacy. In fact, if you buy a television for a thousand dollars from Best Buy, it is probably better to use a credit card. If your television is defective and the store won’t take it back, you can always dispute it with your credit card. If you paid cash, it will be more difficult.
A big chain such as Best Buy is probably going to take care of the customer in most cases, if the complaint is legitimate. But what about other stores? What about online orders? Sometimes you want to be able to do business with a place that you are unfamiliar with. Using digits offers a layer of protection.
But as we have seen with the Fed, digits are not necessarily all that secure. They are vulnerable to a different form of theft than cash.
It is rather ironic that the Fed let up to $100 million be stolen from its digital vault. Officials from Bangladesh are holding the Fed responsible, as they should, if the story is anything close to what is alleged.
The Fed steals money from us all the time in the form of monetary inflation. As they print more money – digitally speaking – it is a subtle form of theft of the cash in your wallet and the digits in your bank accounts. The numbers don’t go down, but they buy less in the way of goods and services over time.
I’m not sure what to think of these foreign governments who have such great trust for the U.S. government and the Fed. They turn over gold reserves to be held by the Fed, and they turn over digits too. Apparently both are vulnerable.
The reason is because these countries need some form of reserves and they don’t trust their own currencies, which is probably correct.
Anyway, if the Fed isn’t able to recoup all of the stolen money, then it can just recoup it by stealing it away from us. They can create $100 million out of thin air without anyone noticing.
The Fed was creating $85 billion per month in 2013 during the peak of QE3. In other words, the Fed was creating over $100 million out of thin air every single hour for about a year.
Based on these facts, there are at least two reasons not to trust the Fed with your money.